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Buying a home after bankruptcy is possible

On Behalf of | Sep 9, 2020 | Bankruptcy |

Many Rockville area residents have had financial difficulties. They can happen at any time. An unexpected medical condition or a job loss can turn a person’s financial stability upside down. In these situations, sometimes a person’s only way out is to declare bankruptcy. Bankruptcy can be a good way to get out from under a pile of bills and make a fresh start. But a person may be hesitant to declare bankruptcy because of the stigma that is attached and the uncertainty of life returning as normal.

Owning a home is the American dream

Owning a home is an American dream that many of us share. Home ownership brings a person a sense of pride and accomplishment. If a person has declared bankruptcy, they may think they will never be able to own their own home. But this is not the case. There are certain steps a person can take after bankruptcy in order to buy a home.

Purchasing a home after bankruptcy

After a person has gone through the bankruptcy process, they want a fresh start. Buying a home may be one of the things on the list. There are certain things a person should do in order to prepare for buying a home after bankruptcy:

  • Repair credit. A person should review their credit report for any discrepancies and make sure everything is accurate. They may also want to open a secured credit card and pay off the debt each month in order to reestablish their credit. They should also pay down any debt they have and pay all bills on time. All of these are ways to show creditors they are serious about making a change to their financial situation.
  • Write a letter of explanation. A letter of explanation can help lenders understand why their client had to declare bankruptcy and what they have done since to repair their financial situation. A person can explain the details as to what led to the bankruptcy and how they are planning to prevent a future bankruptcy.
  • Obtain a mortgage preapproval. A preapproval letter from a lender will say how much they are willing to lend a person. It can help a person understand how much they can spend on a property and let sellers know that you will be able to get a mortgage.

That said, for any matter related to filing bankruptcy or to bounce back after a bankruptcy filing, it may be a wise decision on an individual’s part to seek professional guidance.